Jet Airways in talks with leasing partner seeking payment extension

Beleaguered airline Jet Airways has initiated talks with GE Capital Aviation Services (GECAS), the Irish-American commercial aircraft financing and leasing business, asking for an extension for paying aircraft leasing charges, Financial Express reported.

Jet Airways had a board meeting on Monday, where the company’s lease charges for 17 of its Boeing 737s were discussed, industry sources told FE.

According to the report, Jet Airways is having trouble releasing one of its A330 widebody aircraft from Joramco, a Jordan-based aircraft maintenance facility, due to its default on engine lease payments. A company spokesperson, however, told the newspaper that the said aircraft is only undergoing scheduled maintenance at the facility.

Etihad Airways bought a 24 percent stake in Jet Airways in 2013 for Rs 2,060 crore. Many of its leases are due for renewals and payments, a source close to the matter said.

“So, technically, Jet has not defaulted on any of these lease payments but it is finding it hard to meet its contractual obligations due to the financial troubles it is in. This is the reason why it is back on the negotiating table to rework these contracts and seek an extension to possibly avoid the worst” an airline executive told the paper.

There are clauses in lease agreements under which airlines can defer payments but it gives the lessor a right not to release the aircraft to the airline, as had happened with Vijay Mallya’s now-defunct Kingfisher Airlines.

Sources said that GECAS has a strong commercial relationship with Jet Airways, as the financing company had committed to leasing 12 Boeing 737MAX-8 to the airline in April and the process has already begun. In its fleet, Jet has 225 aircraft of this type.